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What's in Store for Stanley Black & Decker (SWK) Q2 Earnings?

Zacks Equity Research
·4 min read

Stanley Black & Decker, Inc. SWK is slated to report second-quarter 2020 results on Jul 30, before market open.

The company delivered better-than-expected results in the last four quarters, with an earnings surprise of 4.22%, on average. Notably, its first-quarter 2020 earnings of $1.20 per share surpassed the Zacks Consensus Estimate of $1.13.

In the past three months, shares of the company increased 29.1% compared with the industry’s growth of 1.4%.




 

Let us delve deeper.

Key Factors & Estimates for Q2

Stanley Black & Decker’s second-quarter results are expected to reflect the adverse impacts of the coronavirus outbreak on its operations. However, the severity of the headwinds for the quarter is expected to be lower than that communicated in April.

For the second quarter, better-than-expected performance in the U.S. retail channels, with POS growth in double digits, is expected to have supported top-line performance. Improvements are likely to be witnessed in tools and storage, and global security businesses. Specifically, the company predicts a decline of 10% for the security businesses, marking an improvement from the 25% fall stated previously.

Also, the company expects organic sales decline of 15-20% for the quarter on a year-over-year basis as compared with a 35-45% decline mentioned in April.

In addition to the above-mentioned factors, gains from the spur in e-commerce trend, solid product offerings, buyouts and cost-saving measures are expected to get reflected in the results. Also, high dividend payouts and solid liquidity position are expected to get reflected in results. On the flip side, external headwinds — in forms of forex woes and tariffs —adversely impacted the company’s results in the past few quarters. The same trend is expected to have continued in the second quarter as well.

The Zack Consensus Estimate for the company’s second-quarter earnings is pegged at $1.27, indicating a 52.3% decline from the year-ago reported figure and growth of 5.8% from the previous quarter. Also, the consensus estimate for revenues of $3,033 million suggests a 19.4% decrease from the year-ago quarter’s reported number and a 3.1% fall from the last reported quarter.

For the Security segment, the Zack Consensus Estimate for second-quarter sales is pegged at $407 million, indicating a 16.1% decrease from the year-ago reported figure and a 13% fall sequentially. Further, sales estimates for the Tools & Storage segment are pegged at $2,072 million. This suggests a decline of 21.1% from the year-ago reported number and a slight increase from the previous quarter’s figure.

Earnings Whispers

Our proven model suggests an earnings beat for Stanley Black & Decker this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is exactly the case with Stanley Black & Decker as shown below. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Stanley Black & Decker has an Earnings ESP of +19.37%, with the Most Accurate Estimate of $1.51 above the Zacks Consensus Estimate of $1.27.

Stanley Black Decker, Inc. Price, Consensus and EPS Surprise

 

Stanley Black  Decker, Inc. Price, Consensus and EPS Surprise
Stanley Black Decker, Inc. Price, Consensus and EPS Surprise

Stanley Black Decker, Inc. price-consensus-eps-surprise-chart | Stanley Black Decker, Inc. Quote

Zacks Rank: The company currently carries a Zacks Rank #3.

Other Stocks to Consider

Here are some other companies in the Zacks Industrial Products sector that you may want to consider as according to our model these too have the right combination of elements to post an earnings beat this quarter.

Fortune Brands Home & Security, Inc. FBHS currently has an Earnings ESP of +9.08% and is a Zacks #1 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.

Regal Beloit Corporation RBC presently has an Earnings ESP of +8.81% and a Zacks Rank of 2.

Illinois Tool Works Inc. ITW currently has an Earnings ESP of +8.23% and a Zacks Rank #3.

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Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

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Regal Beloit Corporation (RBC) : Free Stock Analysis Report
 
Illinois Tool Works Inc. (ITW) : Free Stock Analysis Report
 
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Fortune Brands Home Security, Inc. (FBHS) : Free Stock Analysis Report
 
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